Home / Auto News / Signals from the season that drives auto sales

India’s automotive industry derives close to a quarter of its full-year sales in the festive season alone. What happens in this roughly two-month long period highlights important trends about consumption, demand and the elusive “sentiment" that drives sales. Mint explains.

What do festive sales indicate so far?

Onam and Ganesh Chaturthi, celebrated in the south and west of India respectively, kicked off the festive season in September on a “lukewarm" note for two-wheeler companies. Registrations during the Ganesh Chaturthi period in Maharashtra declined 23% from the FY19 peak levels. In Kerala, retail sales of 2-wheelers during Onam also declined 15% from FY19 levels, an analysis by Elara Capital showed. For passenger vehicles (PVs), the story is entirely different. Customers snapped up new cars, with retail registrations growing 44% compared to FY19, according to the Federation of Automobile Dealers Associations of India.

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Why is the 2-wheeler segment struggling?

Sales of two-wheelers are under pressure because the largest markets, the rural and semi-urban regions of India, are under stress. Uneven distribution of rain and high inflation have kept rural sentiment muted. Moreover, two-wheeler prices are higher. Two-wheeler companies have raised prices sharply in the past 12 months, with the latest price hike from Hero MotoCorp, the most prominent entry-level 2-wheeler maker, coming just two weeks ago. These price shocks are more strongly felt by first time buyers of entry-level two-wheelers, who form more than 80% of the total two-wheeler industry volumes.

Mixed signals 
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Mixed signals 

Why are passenger vehicle sales on a dream run?

Dealers and automakers say the festive season will deliver the highest sales volumes in a decade. The demand for personal mobility that started with the covid outbreak has stuck with buyers. However, supplies from manufacturers and liquidity with regard to buyers were constrained earlier, resulting in large pending orders and long waiting periods.

Is PV production near normal levels?

Many manufacturers are reporting their best-ever production. The premiumization push is also paying off. New launches in the high-traction growth segment of SUVs and with new powertrain options, including electric and hybrid variants, are keeping customer interest high. The entry-level segment of cars is struggling, much like two-wheelers, more affluent customers in urban and semi-urban regions have seen disposable incomes rise and they’re willing to spend on big-ticket purchases.

What is expected in October sales?

The festive season in North India, beginning with Navratri in the last week of September, has only just started. According to FADA, auto retail will see a new high in October as 24 out of the month’s 31 days are festive. “If (the two-wheeler) segment, especially entry-level 2-wheelers, also perform well, growing in low double digits, the overall auto retail will see higher growth compared to the last two festive season, but may still lag the pre-covid numbers of October’19", FADA said.

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Alisha Sachdev

Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
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